Informational Herding and Optimal Experimentation

Lones Smith and Peter Sørensen

Economics Papers from Economics Group, Nuffield College, University of Oxford

Abstract: We explore the constrained efficient observational learning model - as when individuals care about successors, or are so induced by an informationlly-constrained social planner. We find that when the herding externality is correctly internalized in this fashion, incorrect herds still obtain. To describe behaviour in this model, we exhibit a set of indices that capture the privately extimated social value of every action.

Keywords: LEARNING; INFORMATION; EXPERIMENTATION (search for similar items in EconPapers)
JEL-codes: C90 D83 (search for similar items in EconPapers)
Pages: 24 pages
Date: 1997
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Informational Herding and Optimal Experimentation (2006)
Working Paper: Informational Herding and Optimal Experimentation (2005)
Working Paper: Informational Herding and Optimal Experientation (1997)
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Persistent link: https://EconPapers.repec.org/RePEc:nuf:econwp:139

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